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YUM Stock: KFC Brings Back Colonel Sanders to Spice Up KFC

Looking to boost future KFC sales, YUM! Brands, Inc. (NYSE:YUM) is calling on its past for help: KFC founder Colonel Harland Sanders.

kentucky-fried-chicken-185After a 21-year absence, Colonel Sanders returns to help KFC re-establish a brand identity. His reintroduction also coincides with the 75th anniversary of KFC’s fried chicken recipe.

The hope is that the Colonel will boost the store’s image and promote sales. Ideally, the boost in KFC branding should grow the store’s sales and help drive YUM stock up even further, on top of an impressive 30% year-to-date surge.

Return of the Colonel

Saturday Night Live alum Darrell Hammond plays the role of Colonel Sanders in this latest campaign. Hammond stars in three KFC television spots for YUM: “Bucket in my Hand,” “State of Kentucky Fried Chicken Address,” and “America’s Favorite Music.” All of the ads revolve on Colonel Sanders’ observations on how the world has changed.

Advertising agency Wieden + Kennedy — responsible for the Nike Inc (NYSE:NKE) “Just Do It!” ads — created the latest KFC campaign.

But the Colonel Sanders ads are only one part of a KFC rebranding effort intended to boost YUM stock.

Along with the redesign of the KFC.com site, YUM has created a micro-site just for the Colonel. This site includes the “Hall of Colonels” — which covers Colonel Sanders’ life — and a digital game called “Colonel Quest.”

YUM is also rolling out a fancier KFC store redesign. Store redesigns are an effective way to generate foot traffic as the new designs bring customers back to the store. The latest redesign was tested out in Louisville, Kentucky and Las Vegas stores. KFC stores nationwide will be getting similar design refresh over the coming months.

KFC is not the only store to bring back its old mascots. Rival McDonald’s Corporation (NYSE:MCD) recently reintroduced the Hamburglar. And the Burger King for Burger King Worldwide Inc. (NYSE:BKW) made an appearance at the Floyd Mayweather vs. Manny Pacquiao fight, of all places.

The State of KFC

YUM stock is still dependent on China. According to the Courrier Journal, “KFC in China has long powered YUM’s double-digit annual growth in shareholder dividend payments.” And, according to Janney analyst Mark Kalinoski, “Investors focus on China. I’ve had some clients tell me they don’t even care about the U.S. business. This is a China stock for them.”

Adding the Colonel and refreshing U.S. stores shows that YUM is clearly refocusing efforts in the U.S. markets.

While KFC is doing well — YUM reported KFC system sales up 8%, unit growth of 2% and same-store growth of 5% over the past quarter — it is no longer the market leader it once was. In 1999, KFC stores in the U.S. held a 40% market share among chicken restaurants, while Chick-fil-A held a mere 9%. Today, KFC’s rival has surged, claiming a 28% market share, while KFC’s share has been cut in half. This branding boost is YUM’s latest effort to reclaim market position and further boost YUM stock.

Will This Chicken Dance?

KFC’s celebration of its heritage through its founder is an effort to connect customers with a brand, which it hopes will resonate in consumer’s minds and draw in U.S. store traffic. With McDonald’s and Burger King also resurrecting mascots, it will be interesting to see how consumers react.

KFC has demonstrated decent financial results for Yum Brands, so there might be reason for optimism about the recent revival of Colonel Sanders. Should the new campaign succeed, YUM stock investors might really have something to cluck about.

As of this writing, Johnny Chen did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/05/yum-stock-colonel-sanders/.

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